When it comes to asset management, many people invest their assets into ETFs (exchange-traded funds) or mutual funds. These two types of funds have a lot in common, and they are both extremely popular ways to diversify your investments. However, there are still major differences between the two.
ETFs (Exchange-Traded Funds)
The major benefit of ETFs is that they cost far less for an entry position than mutual funds (see below), typically at the price of 1 share (or market price). Depending on the type of ETF you’re investing in, that could be as little as $50. Similar to stocks, ETFs have real-time pricing and can be sold short. Plus, they have sophisticated order types so that you have greater control over your price. However, you can’t make automatic investments or withdrawals into or out of ETFs.
Mutual Funds
Mutual funds, unlike ETFs, have a higher minimum investment requirement, though the minimum can vary depending on the type of fund and company. They also don’t have real-time pricing like ETFs, so it will be the same price no matter what time of day you placed your order. Nevertheless, mutual funds have automatic investments and withdrawals, making it easier to curtail to your preferences. You also have a bit more management variety, as mutual funds have both active and indexed varieties, while ETFs are passive investments.
At First State Investment Advisors, we can help you manage and grow your wealth and investment portfolio. Contact us today at 918-492-1361 to learn more!
This overview is for informational purposes only and is not a recommendation. It should not be the sole deciding factor in making an investment. Investing is a risk and, as with all risks, a positive return is not guaranteed. Past performance does not indicate future results.